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The Mexican Peso: A Currency in Turmoil

Investors are starting to doubt peso can continue to serve as a proxy for emerging markets

By

Ira Iosebashvili

Updated Feb. 13, 2017 7:54 a.m. ET

The Mexican peso’s recent tumult is upending the way many global investors hedge their bets on emerging markets and raising the risks associated with investing in the developing world.

The peso is one of the most liquid emerging-market currencies and one of the few in the group without restrictions on trading. That has made the currency especially useful for investors looking to hedge their bullish emerging-market positions by going short, or making a bearish bet, on the peso.